As anticipated, XAU/USD (gold price in terms of USD) extended the drop for the second straight session and almost reached $ 1200 barrier, before recovering some ground to finish the day at 1208.79. The bullion lost almost $ 14 yesterday as market sentiment improved amid risk-on rally in the global equities and also on a 6% jump in the oil prices. Moreover, sharp losses in the EUR and GBP on the back of intensifying Brexit fears, benefited the US dollar and weighed on the dollar-denominated commodity. Technically, the precious metal breached the 5 & 10-DMA support zone at 1215 and gave a closing below the last, although held well above the crucial $ 1200 support.
As for today’s trade, the gold prices have staged a solid comeback from near 1200 levels and rebounded nearly $ 15 as risk-on sentiment waned after the oil prices reverted to the red zone amid omnipresent supply glut worries. Hence, a sell-off across the global equities was triggered, with investors seeking to protect their capital in the ultimate safe-haven gold. At the moment, the prices are seen consolidating the upside near 1218 levels and await fresh impetus from weak US data for another push higher.
Later today, the US calendar offers the consumer confidence and existing home sales data, both of which are expected to come in weaker than the previous result. Hence, a set of dismal US economic news will drag the US currency lower and bolster the XAU bulls. In another evidence of increased investors’ confidence in gold, the holdings in the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, rose to 752.29 tonnes on Monday, the highest since March last year.
Technicals – Bullish crossover on daily sticks, more room for upside?
On hourly charts, the prices have taken out the strong resistance located around 1218 levels, making fresh daily highs at 1222.93. While on the daily charts, the prices cling to the 5 & 10-DMA confluence placed just under 1218. The daily RSI inches higher and suggests further upside bias, while the bullish crosser represented by 5-DMA breaching 10-DMA from below also backs the case for more northward moves. Hence, a break above the daily highs, the pair finds the immediate resistance near 1226 region (previous high), and from there to 1235-40 (last week’s tops). On the flip side, the immediate support is placed at 1200 levels, below which floors open up for a test of Feb 16 low reached at 1190.85.
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